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Average Two-bed London Rental Property to Reach £2,000 Per Month by September

Published On: April 20, 2016 at 8:36 am

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The average price of a two-bedroom London rental property will reach £2,000 per month by the late summer, according to Portico, London estate agents.

The firm’s latest Q1 Rental Report found that the typical rent price on a two-bed property in the capital is currently £1,867. With rents rising rapidly, it is expected that tenants will be paying over £2,000 for the same property by September.

Portico believes that a rush of graduates seeking professional jobs and a new lifestyle in London around September time drives rent price growth. And it’s not just prices that rise – tenant demand surges by a huge 64% in September, as available rental stock drops by 10% when compared with average monthly growth.

Average Two-bed London Rental Property to Reach £2,000 Per Month by September

Average Two-bed London Rental Property to Reach £2,000 Per Month by September

Portico sees almost double the number of enquiries per property in September than it does in an average month, and four times the level of interest compared with the typical December.

The particularly high demand seen in the late summer causes tenants to compete more fiercely for properties. Portico reports that prices achieved for similar properties are generally 11% higher in September than in December.

Based on this data, the firm predicts that two-bed rents will hit £2,008 per month in September this year. Split between two tenants – £1,004 a month – this shared rent will eat up 46% of the average London monthly salary.

Confirming this belief, the Residential Landlords Association recently revealed that almost all landlords (84%) are considering increasing their rents to accommodate the higher taxes they now face.

Buy-to-let landlords are now charged an extra 3% in Stamp Duty when they purchase a rental property, while the amount of mortgage interest that landlords can offset against tax will be reduced from April next year. For more information on how these changes will affect you, see this advice from Paul Mahoney of Nova Financial: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/

However, if you’re a landlord in London, you’ll be pleased to learn that rents are rising between 1-7% in the majority of London boroughs.

Portico has found that properties in Ealing have seen the greatest increase in rents, at an average of 6.9% for a two-bed property, to £1,825 per month. Richmond-upon-Thames follows with a rise of 6% to £1,934 a month for a typical two-bed, while rents in Lambeth are up by 5.8% to £2,051.

However, average rents on two-bed properties have fallen in seven London boroughs, including two parts of prime central London. Rent prices in Westminster and Kensington and Chelsea are down by 5.7% and 1.1% respectively. These figures reflect those reported recently, suggesting that the London property market is running out of steam.

During Q1, Bromley experienced the largest decrease in rents for all properties, with a drop of 6.3%, followed by Hillingdon at 4.4% and Kingston-upon-Thames at 4.1%.

If you are worried that you need to revise your rent prices, this advice will help you set the perfect rent for your property: https://www.justlandlords.co.uk/news/setting-perfect-rent-price-property/

Legal Expert Offers Advice for Landlords on Section 21 Notices

Published On: April 19, 2016 at 1:56 pm

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When the Deregulation Act 2015 was introduced on 1st October, it brought with it many complications for landlords. Legal expert Francessca Tremeer has advice for landlords on what you must do to avoid a section 21 notice becoming invalid.

Under the Deregulation Act, there are new rules for landlords to adhere to when serving a section 21 notice on tenants for Assured Shorthold Tenancies (ASTs) that started on or after 1st October 2015.

Tremeer, of QualitySolicitors Burroughs Day, explains that to ensure best practice, you must “get it right at the start” by complying with all of the rules and regulations that govern the private rental sector. This includes keeping consistent and correct documentation, conducting the required safety checks, complying with

Francessca Tremeer

Francessca Tremeer

deposit legislation and keeping records of all correspondence with your tenants.

“Section 21 notices are easy to get right, but many people get them wrong,” says Tremeer.

If you are serving a section 21 notice to evict a tenant, you do not need to give reasons for asking them to leave. However, be aware that you cannot serve a section 21 notice within the first four months of a tenancy, or within six months of receiving an improvement notice from the local authority. Also, be aware that you must use the word ‘after’ in your notice and specify a calendar date for the tenant to leave. There is a prescribed form of section 21 notice that landlords should use.

“When serving the section 21 notice, you must allow enough time for service of the notice,” says Tremeer. She explains that you must stick to what is written in the tenancy agreement about serving eviction notices and choose the relevant method of service.

“If there is no mention of serving by post, for example, then don’t post it,” adds Tremeer.

You must also keep a proof of service, so if you are serving the notice in person, you should take a witness with you and make a note of the date and time of service. Additionally, you must ensure that the tenant has physically received the notice, either by putting it into their hand, through the letterbox, or under the door.

If your tenant stays in the property after the section 21 notice has expired, what can you do? “You can then use the accelerated possession procedure,” says Tremeer.

There is usually no need for a hearing in these cases, you will simply need to complete a claim form for possession, sign the document and post the form, tenancy agreement and other required documents to the court. However, this comes with a cost of £355. If you let out a House in Multiple Occupation (HMO), you may also be required to send your license.

If your tenant still doesn’t leave after a possession date has expired, you can send a bailiff to the property. This typically costs £110, but can take six weeks or more. “If you do need to go down this route, it is useful to have a clause in the tenancy agreement that tells tenants not to leave their possessions in the property, and what you will do if anything is left behind,” advises Tremeer.

As the process of evicting a tenant can take a long time, and if they haven’t been paying the rent already, your finances may suffer. You should consider taking out landlords insurance.

Follow this advice and stick to the law!

QualitySolicitors offers a fixed fee possession service for landlords. If you have further questions relating to problem tenants and how to gain possession, QualitySolicitors Burroughs Day provides a free first advice service and you can also sign up to their regular legal bulletin for landlords.

Salford set for student property boom

Published On: April 19, 2016 at 11:36 am

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Having just been voted as one of the top-ten most improved universities, The University of Salford is expected to attract thousands more students through its doors.

As such, demand for student property is also set to rise, with savvy buy-to-let investors being urged to seriously consider purchasing property in the region.

Salford success

Just last summer, Salford was named as the second most improved university in the UK’s 2015 National Student Survey. This in turn saw the university soar in league position in The Times and Sunday Times Good University Guide 2016.

Despite the university planning to invest £81m in state-of-the-art student accommodation, demand for property will outstrip supply. This is according to the student property investment specialists, The Mistoria Group.

Mish Liyanage, Managing Director of The Mistoria Group, noted, ‘the UK remains the no 2 destination for international students after the US. The number of international students attending British universities has increased dramatically over the last ten years and this is contributing to a large rise in student numbers.’[1]

Salford set for student property boom

Salford set for student property boom

Surge

Continuing, Mr Liyanage said, ‘this surge in the UK student population provides investors and landlords with a great opportunity. Student property is a very profitable asset class giving robust returns. For example, in Salford a high-quality HMO which will house 4 students, can be purchased for £160k. The return on investment is very attractive too, with 13% (8% cash rental and 5% capital growth.)’[1]

‘Salford is a great place to invest. It is a dynamic and vibrant university city with world-class attractions like The Lowry, which has the largest free collection of L S Lowry’s work and the Imperial War North. Salford also offers a wide selection of theatres, galleries, designer shopping, river cruises, museums, plus The Quays, Greater Manchester’s unique waterfront destination. Over half the city comprises of green spaces and features forests, nature reserves, mosslands, parklands and picturesque villages. What’s more, there are hundreds of acres of beautiful parks, with a variety of wildlife habits,’ Liyanage concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/demand-for-student-property-set-to-boom-in-salford.html

Auction House still enjoying record sales

Published On: April 19, 2016 at 10:34 am

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Sales at Auction House were positive in the latest auction on 14th April, with properties sold totalling £15,567,480

This total was very encouraging, with many onlookers predicting that the introduction of the 3% additional Stamp Duty would slow the market.

In total, 79% of lots were sold, many above their guide price.

Performance

During the first quarter of this year, Auction House recorded its strongest performance in its nine-year history. Between January and March, this auctioneer sold 729 lots from 939 offered. This figure was up 14.3% on the same period in 2015 and raised £92.2 million.

This underlines how residential landlords rushed to invest before additional stamp duty surcharges came into play.

Auction House London Director, Jamie Royston, noted, ‘we really didn’t know what to expect at the first auction since the Stamp Duty rises were brought in at the start of April. But with realistic prices agreed from vendors the auction market is still proving to be buoyant-although fears over Brexit are dampening the enthusiasm of some investors.’[1]

Auction House still enjoying record sales

Auction House still enjoying record sales

Finding the norm

Founding Director of Auction House, Roger Lake, noted, ‘the auction market will quickly find the new norm, with investor buyers factoring in the new rates of Stamp Duty. There is still a real shortage of housing stock in the UK and population numbers are rising. Rents are pushing up too and first time buyer numbers are increasing aided by the many favourable government initiatives. However, the bigger influence for buyer sentiment during the second quarter this year will no doubt be the debate over Brexit.’[2]

‘The property market never likes uncertainty-and the reduced demand means that more bargains could be found around the country in our auctions during April, May and early June. Our view is that the time is right for prudent investors to dip in rather than duck out, ‘Lake added.[2]

[1] http://www.propertyreporter.co.uk/auctions/auction-market-still-buoyant-post-stamp-duty-rises.html

[2] http://www.propertyreporter.co.uk/auctions/auction-house-announces-record-q1-figures.html

“Rip-Off” Letting Agent Fees Cost Up to £780, Says Generation Rent

Published On: April 19, 2016 at 10:23 am

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Tenant lobby group Generation Rent has renewed its call for the Government to ban letting agent fees for tenants, after finding that some renters are charged up to £780.

"Rip-Off" Letting Agent Fees Cost Up to £780, Says Generation Rent

“Rip-Off” Letting Agent Fees Cost Up to £780, Says Generation Rent

Earlier this year, the group began researching more than 700 agents across the country. It found that fees vary massively for what it considers a standard service. It says that this shows how letting agents are charging disproportionate fees to those stuck in the private rental sector.

The website showcasing the fees, lettingfees.co.uk, shows that the average fee for a two-person household is £386, on top of rent, deposit and moving costs.

While four agents do not charge anything, the highest fee for two people is £780, charged by Skampi in the London Borough of Tower Hamlets.

Since the Consumer Rights Act 2015 was introduced, letting agents have been required to publish their fees. However, the research found that 14% of agents do not comply with the law, and could be fined £5,000.

Working alongside technology firm Inkleby, Generation Rent and its volunteers have gathered fee figures from letting agents in eight London boroughs and across Manchester and York. The findings will serve as a guide for tenants in those areas, so that they can avoid sky-high fees.

The Director of Generation Rent, Betsy Dillner, comments: “Competition for homes is fierce, so tenants aren’t in a position to avoid paying letting agent fees, and agents often charge what they like. If tenant fees were banned, agents could start competing properly for business, and tenants wouldn’t have to dip into their savings to be able to move home.”1

A recent study by housing charity Shelter shows that first time buyers will need to earn £64,000 per year by 2020 if they wish to purchase a home.

With prices set to continue rising, demand in the private rental sector is expected to remain strong.

Meanwhile, we recently reported that those buying properties in London need deposits up to 170% higher than those required in the rest of the UK, highlighting the vast difference in the housing market around the country.

1 http://uk.businessinsider.com/letting-agent-fees-range-from-zero-to-780-for-no-apparent-reason-2016-4

Homebuyers in London Paying 170% More in Deposits than the Rest of the UK

Published On: April 19, 2016 at 8:59 am

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The average deposit for a property in Greater London is almost three times, or 170% more, than in the rest of the UK, according to new research.

Over the past three years, the average deposit in London has risen by almost £30,000, or 30%, reaching a huge £127,000, says the report from My Home Move.

However, the average deposit size as a proportion of purchase price for the UK as a whole has fallen by 1.8% since 2013, but home movers’ deposits remain high, as house prices continue to rise.

Homebuyers in London Paying 170% More in Deposits than the Rest of the UK

Homebuyers in London Paying 170% More in Deposits than the Rest of the UK

My Home Move’s data shows that nationally, the average property price in 2013 was £162,040, requiring a deposit of £44,690. In 2014, the average home cost £173,202 with a deposit of £45,534, rising to £182,293 and £46,976 in 2015.

Contrastingly, the average house price in Greater London was £377,855 in 2013 with a deposit of £99,375, up to £439,399 in 2014 and a deposit of £112,266, and a huge £482,512 in 2015, requiring a deposit of £127,141.

In the UK as a whole, the deposit needed in 2013 was 27.58% of the purchase price, falling to 26.29% in 2014, and dropping again to 25.77% in 2015. However, in the capital, a buyer needed a deposit of 26.3% of the purchase price in 2013, 25.55% in 2014 and up to 26.35% in 2015.

The CEO of My Home Move, Doug Crawford, states: “The London property market has always commanded greater prices than anywhere else in the UK, but our research has shown just how extreme the situation is becoming.”

He notes that London property prices have increased by 27% in the past three years, and while the rest of the UK has experienced a small decline in deposit size, those seeking a home in London are paying 170% more in deposits than other UK buyers.

“This situation is unsustainable and has been driven by rising house prices. For some, their deposit will come from the equity in the property they are selling. However, for many, they will still need to save tens of thousands of pounds to make the move onto and up the property ladder,” he says.

“Ultimately, it still begs the question: Who is going to help those looking to enter the capital’s housing market and those on the lower rungs of the ladder, first time buyers and second steppers?”1

He points out that earlier in the year, My Home Move predicted that 100,000 properties would be purchased in 2016 using gifted deposits from buyers’ parents. Based on these figures, it seems that a very large proportion of these could be based in Greater London.

However, recent research does suggest that the London property market is running out of steam.

1 http://www.propertywire.com/news/europe/uk-buyers-deposit-research-2016041811807.html